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Mandatory Electronic Filing for Businesses with 10 or More Combined W2 and 1099 Filings in Tax Year 2023

Mandatory electronic filing for businesses.

As the world of taxation continues to evolve, businesses need to stay updated with the latest changes to ensure compliance and avoid penalties. One significant change that will impact businesses in tax year 2023 is mandatory electronic filing. Electronic filing will be mandatory for those with 10 or more combined W2 and 1099 filings. In this blog post, we’ll explore what this means for your business, why electronic filing is becoming a standard practice, and how you can ensure a smooth transition to meet this requirement.

The Transition to Mandatory Electronic Filing for Businesses

Understanding the Requirement

Starting in tax year 2023, the IRS requires businesses that have 10 or more combined W2 and 1099 filings to submit these forms electronically.

This requirement applies to various forms, including W-2, W-2AS, W-2GU, W-2VI, and Form 499R-2/W-2PR (collectively Forms W-2), but not Form W-2CM.

Why the Shift to Electronic Filing?

Electronic filing offers several advantages, both for businesses and the IRS.

  • It reduces errors and improves accuracy by eliminating handwritten forms, which can be prone to mistakes.
  • Faster processing means quicker access to refunds for eligible businesses.
  • Electronic filing is more secure and helps protect sensitive taxpayer information.
  • It streamlines the tax administration process, making it more efficient for the IRS.

Preparing for Electronic Filing: 

Review Your Filings:

Begin by assessing your previous years’ filings to determine if you meet the 10 or more combined W2 and 1099 requirements for tax year 2023. To see if you need to file your information returns electronically, just add up the number of information returns and the number of Forms W-2 you’re filing in a calendar year. If the total is 10 or more, you have to file them all electronically. 

Choose an Electronic Filing Method:

There are several ways to electronically file your tax forms, including through the IRS’s own e-filing system, approved third-party software, or by working with a professional tax service like us. Research and select the method that best suits your business needs and budget. If you decide that you’d like to hire a professional tax service, contact us today for a consultation. We’re here to help!

Gather Your Data:

Ensure that all your employee and contractor information, as well as income and withholding details, are accurately recorded and ready for electronic submission.

Test Your Filing:

Before the filing deadline approaches, consider conducting a test run to make sure your chosen electronic filing method is working correctly and that all data is accurate.

Keep Records:

Maintain records of your electronic filings for your own records and for potential future audits.

Simplify your e-filing with Ledger Aid:

With the IRS’s move towards mandatory electronic filing for businesses with 10 or more combined W2 and 1099 filings in tax year 2023, it’s essential for business owners and tax professionals to adapt to these changes. Electronic filing offers numerous benefits, including improved accuracy, faster processing times, and enhanced security. By preparing ahead and choosing the right filing method for your business, you can ensure a seamless transition and remain compliant with the IRS’s requirements. If you need assistance with electronic filing or have questions about tax compliance, consider reaching out to a qualified tax professional or service provider like us to guide you through the process. Stay updated and stay compliant to ensure a hassle-free tax season in 2023 and beyond.

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